Bayonne packaging Case Study Analysis

Bayonne Packaging Case StudyMPE-14, NMIMS

Bayonne Packaging, Inc. is a printer and paper converter company

Executive Summary

Industry Vertical – Specialty Packaging

Manufactures customized packaging for industrial customers

Specialized in innovative packaging solutions along with full service from design to final delivery

They also work closely with customers to develop the design as per their need

Competitive Strengths: Beautiful product, great designs, classy printing, handling of innovative and difficult package design and the ability to fold and glue the complex blanks

Computerized Scheduling system not being followed

Current state (point of Departure) of Bayonne Packaging

X

X

X

X

X

No maintenance schedule being done

Two extra days at each work center

Family member Neil Rand running expedites and not caring about the computer scheduling system

The company does not have a method of determining the priority of orders

51% of the orders are late for Oct’11

Scrap and customer rejectsare very high, eliminating profitability

incurred a loss in October 2011 for the first time in past ten years

Problem Statement – Delivery, Quality leading to Net Loss

1.5% -7.2%

Financial Analysis

0.50%

1.50%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

Customer Rejections

Oct-09 Oct-11

72.11%

55.30%

90.70%

64.90%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

Cost Of Goods Sold & Cost Of Shipped Material

Oct-09 Oct-11

This has happened because the company has reduced its profit margin in order to increase its sales volume

Quantifying Operations & Supply Chain Performance

Percentage of full (i.e. not partial) deliveries that is on time per time period

Average delay time of an order

Down time per machine

DEPENDABILITY

% of goods rejected by Quality Control and Customer

% of goods with missing glue lines or excess glueQUALITY

No. of days for production

The amount of time spent on set up times per order / per period

No. of materials flowing through operations per period

The average critical ratio

SPEED

The cumulative volumes in US dollars / The cumulative numbers of shipped orders

The COGS per month as a percentage of net sales

PBT – Profit before tax

COST

No. of different orders that can be expedited

No. of different packages possible to print

Benchmarking

FLEXIBILITY

Capacity Utilization at various work Centers

Sl .No MachineTotal Hours Per

machineNumber of Machines

Combined Running times

Theoretical running times

Capacity Utilization per work center

1 Composition 255 1 255 347 73.49%

2 Jagenburg Sheeter 279 1 279 347 80.40%

3 Heidelberg Press 348 2 696 694 100.29%

4 Bobst Die-Cut 272 2 544 694 78.39%

5 Int. Roy / Queen F& G 156 3 468 1041 44.96%

6 Int. Staude F&G 179 4 716 1388 51.59%

7 Int. 3A window/ patch 145 2 290 694 41.79%

Heildeberg press is the bottleneck with capacity utilization of 100.29%

Number of working hours in October'11 is 347 hours

Capacity in pieces of the Die-cut center in three cases

Order size (pieces) 30,000

Time per sheet 0.0075

Time per sheet (1 sheet = 3 piece) 0.0025

Time to process order (30000 piece * Time per piece) 75 Minutes

Set up time 2,5 hrs 150 Minutes

Total minutes per order 225 Minutes

15 hours per day is 900 Minutes

Total capacity of Die-cut center 4 Orders

Total capacity of Die-cut center in pieces 120,000 Pieces

Order size (pieces) 30,000

Time per sheet 0.0075

Time per sheet (1 sheet = 3 piece) 0.0025

gang 2 orders in a batch, number of pieces in batch 60,000

Time to process order (60000 piece * Time per piece) 150 Minutes

Set up time 2,5 hrs 150 Minutes

Total minutes per batch 300 Minutes

15 hours per day is 900 Minutes

Total capacity of Die-cut center 4 Orders

Total capacity of Die-cut center in orders 6 Orders

Total capacity of Die-cut center in pieces 180,000 Pieces

All orders are ganged

Time per sheet 0.0075

Time per sheet (1 sheet = 3 piece) 0.0025

Total minutes per day 900 Minutes

Minutes required for one required set up 150 Minutes

Remaining available minutes for running orders 750 Minutes

Number of pieces possible per day 300,000 Pieces

Number of orders possible per day 10 Orders

Orders in the Royal / Queens work center

Number or partialed orders Royal Queen 40 Orders

Number of orders on Royal Queen total 77 Orders

Total set up time Royal Queen in October 231 Hours

Setup time per order 3 Hours

40 orders require 40 set ups (no partials)

Total number of set ups 40 + 37 77 Setups

Time per set up 3 Hours

Total set up time 231 Hours

Total number of working hours for three machines (347 * 3) 1041 Hours

Time left for folding and gluing (1041 - 231) 810 Hours

Time required for F&G of one piece 0.0023 Minutes

Number of pieces to be folded and glued 21,130,435 Pieces

40 orders require 80 set ups (no partials)

Total number of set ups 80 + 37 117 Setups

Time per set up 3 Hours

Total set up time 351 Hours

Total number of working hours for three machines (347 * 3) 1041 Hours

Time left for folding and gluing (1041 - 351) 690 Hours

Time required for F&G of one piece 0.0023 Minutes

Number of pieces to be folded and glued 18,000,000 Pieces

Assumptions And Implicit Findings

CASE - 1 CASE - 2

Order size to the Royal / Queen and Staude work centers

Work centerNumber of Machines

Set up per Machine

Total set upTime

Speed per machine(minute/piece)

Speed per work center(minute/piece)

Royal / Queen 3 180 540 0.0023 0.00077

Staude 4 40 160 0.015 0.00375

Difference in setup time 380 minutes

in 380 minutes, Staude center can process 101,333 pieces

After both setups; the production breakeven point can be calculated as :x is minutes of both machines in processStaude Royal/Queen101333 + x * 1/0.00375 x*1/0.00077x= 98 minutes

Breakeven point in time is 98 minutes after Royal/Queen's setupin 98 minutes, Royal/Queen can process 98/0.00077 pieces.Breakeven point in pieces is : 127.506 piece

Conclusion

set up time needed to set up the same order on Royal Queen, the Staude can produce 101.333 pieces

Will take Royal/Queen to catch up after both machines are operational

Above orders should be routed to the Staude

380minutes

98minutes

127.506pieces

Recommendations Focused on Effectiveness and Efficiency

Increase capacity by allowing for overtime

Daily meetings

Prioritizing orders (e.g. red flags for rush orders) and weigh the consequences of rush orders for the remaining orders, therewith optimizing the number of rush orders

Increase / improve maintenance on machines in order to increase quality

Manage variability better by managing of demand e.g. introducing price reductions for bulk orders

Increase capacity by widening the bottle neck (e.g. extra shift on the Heidelberg press)

Introduce pre-Work Order Jacket – a report that is sent to other departments when the prior department starts working on and order. This way, the later department knows what orders are on the way in couple of days.

Increase capacity by investing in additional equipment

Introduce a companywide ERP system in order to schedule production in reliable, achievable way that is adhered to by all departments (including sales). This should result in fewer rush orders, fewer partial orders and less unnecessary set up time.

SHORT TERM(0–3 MONTHS)

MID TERM(3–9 MONTHS)

LONG TERM(9+ MONTHS)

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